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9 January, 15:33

Fox, Greg, and Howe are partners with average capital balances during 20X1 of $120,000, $60,000, and $40,000, respectively. Partners receive 10% interest on their average capital balances. After deducting salaries of $30,000 to Fox and $20,000 to Howe, the residual profit or loss is divided equally. In 20X1 the partnership sustained a $33,000 loss before interest and salaries to partners. By what amount should Fox's capital account change?

A. $7,000 increase

B. $11,000 decrease

C. $35,000 decrease

D. $42,000 increase

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Answers (1)
  1. 9 January, 17:58
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    A. $7,000 increase

    Explanation:

    -33,000

    -30,000

    -20,000

    -12,000

    -6,000

    -,4000

    -105,000

    Distribute equally betwne partner: (35,000)

    FOX:

    30,000 salary + 12,000 interest - 35,000 los distribution = 7,000 increase
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